TFSReports account

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We are getting started to use TFS in our company, but I am having some issue with our IT-department.

The TFSReports account is a service account, and thus the IT guy will not allow Local logon, because it is service account. Not sure if he is right, but what other options do I have?

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You can find documentation here: Service accounts and dependencies in Team Foundation Server

TFSReports, which can be a local account, a domain account, or Local Service in a workgroup.

Required Permission and Group Membership: Allow log on locally on the application-tier server and on the server that is running SQL Server Reporting Services TFSWareHouseDataReader on the report server

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There's no way around that -- it's listed as a requirement because it's a requirement.

You can consider not setting up reporting services; a lot of the newer features in the past 3-5 years aren't stored in the data warehouse or analysis cubes (builds and releases, as a major example) because the push has been to make the reporting capabilities in TFS itself as good or better than what's stored reporting services.